href='mailto:Headlines@abiworld.org?subject=Subscribe me to the ABI
Headlines Direct'>
src='/AM/Images/headlines/headline.gif'>
April 5, 2006
name='1'>Consulting Firm Says First Quarter Bankruptcies Hit 20-Year
Low
Bankruptcy filings
plunged to their lowest level in 20 years in the first three months of
2006, according to Lundquist Consulting, a
w:st='on'>
size='3'>Burlingame
w:st='on'>
size='3'>Calif.
size='3'>consulting firm that tracks bankruptcy cases, the
size='3'>San Francisco Chronicle reported
today. Lundquist, which culls its figures from court records nationwide,
said 102,949 bankruptcies were filed in the first quarter of 2006, less
than a third as many as the 381,743 petitions filed during the same
period in 2005. The firm said 205,129 Americans filed for bankruptcy in
the week leading up to Oct. 17. According to Lundquist, chapter 13
filings accounted for 45.7 percent of all bankruptcy petitions in the
first quarter of 2006. That compares with the 29 percent level that has
prevailed in recent years. Prof.
w:st='on'>
size='3'>Jack Ayer
scholar with the American Bankruptcy Institute, said it will take time
for the system to adjust to the surge in 2005 filings and for new
patterns to emerge.
href='http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2006/04/05/BUGNEI3ECC1…'>Read
more.
With
Recess Looming, Congressional Conferees Explore Compromise on Pension
Reform
Congressional conferees
attempting to resolve differences on pension legislation said Tuesday
they were making progress on the long-stalled bill,
face='Times New Roman' size='3'>CongressDaily
size='3'>reported today. Senate negotiators are offering compromises to
their House counterparts, although several issues remain unresolved.
Most of the issues could be resolved by accepting a midway point between
the House and Senate bills, said Sen. Trent Lott (R-Miss.), a conferee.
Other sticking points, including a Senate provision that would require
companies with poor credit ratings to pay more into their pension
coffers, will be more difficult. “The House has to concede that
credit rating will be part of it,' Lott said, but added that the Senate
negotiators would have to accept changes to the credit-rating language,
such as a longer period of time before the provision kicks in. Several
lawmakers involved in the talks also said conferees are considering
extending additional relief the Senate bill provides airline carriers to
others, including the steel and auto industries. Lawmakers had hoped to
adopt a bill before leaving for the Easter recess, since the deadline
for companies to make their first quarter pension payments is April 15.
Some have dampened expectations they could meet that deadline, but
Isakson and Lott were optimistic. Lott suggested that negotiators might
reach an agreement on a basic outline before the
break.
The union representing
the nearly 6,000 pilots at Delta Air Lines voted overwhelmingly to
approve a strike should their contract be voided by an arbitration
panel, the New York
Times reported today. The panel is expected to
issue a ruling by April 15. The decision by the pilots gives negotiators
on both sides more than a week to narrow their differences and avoid a
work stoppage that many believe would lead to a liquidation of Delta.
Among the issues is the company's request for $305 million in annual pay
cuts; the pilots have offered $140 million. The chief executive of
Delta, Gerald Grinstein, said last week that the airline, entirely
dependent on lenders that could withdraw financing in the event of
a strike, could not survive a shutdown lasting even 24 hours.
href='http://www.nytimes.com/2006/04/05/business/05delta.html?_r=1&oref=slogi…'>Read
more.
name='4'>Demand for Bankruptcy Attorneys Weakens
Demand for lawyers
specializing in bankruptcy law showed growth over the past year, but at
significantly lower rates than other practice groups, according to a
survey of attorney placement requests among top law firms,
Portfolio Media
reported today. The survey, conducted by Los
Angeles-based attorney placement firm BCG Attorney Search, showed that
between March 2005 and March 2006, demand for bankruptcy attorneys in
the
face='Times New Roman' size='3'>United
States
only 15 percent at law firms that use recruiting services. Other
practice groups, such as intellectual property, corporate and antitrust
law, showed more typical surges of between 40 percent and 66 percent.
The average among all practice groups was 50 percent. BCG recruiter
Gloria Cannon, a former financial restructuring attorney at law firm
Milbank,
size='3'>Tweed
LLP, attributed the 15 percent increase to a reversal of fortunes that
began when the economy plummeted after the Internet bubble
burst.
Rap
Mogul 'Suge' Knight Files for Bankruptcy
w:st='on'>
size='3'>Marion
Knight and his Death Row Records label filed for bankruptcy on
Tuesday, hours before the rap mogul was expected to lose control of his
label in a $107 million civil court judgment, Reuters reported today. By
seeking bankruptcy protection, Knight, who co-founded Death Row in the
1990s and helped launch the careers of Snoop Dogg and Tupac Shakur,
forestalled a court order that would have handed control of the label to
a special court officer known as a receiver. Superior Court Judge Ronald
Sohigian issued the order after finding that Knight had failed to make
good on the $107 million judgment obtained last March by Lydia Harris,
who claimed he cheated her out of a 50 percent stake in Death
Row.
href='http://news.yahoo.com/s/nm/20060405/music_nm/knight_dc_3'>Read
more.
name='6'>Calpine to Shed Some Power Plants, Offices
Looking to slim down
before it emerges from bankruptcy protection, power producer Calpine
Corp. announced that it plans to sell 20 power plants and close three of
its offices as part of its restructuring objective to trim its annual
costs by $150 million,
size='3'>Portfolio Media reported yesterday.
The company will sell about a fifth of its plants that are no longer
essential to its core operations due to financial performance, industry
prospects, strategic compatibility and other reasons. Calpine, which did
not disclose which plants would be sold, will shed the majority of these
assets by the end of 2006. It also will shut the doors of three of its
offices, located in
size='3'>Atlanta
w:st='on'>Boston
and
size='3'>,
size='3'>Calif.
to be managed primarily out of Calpine’s headquarters based
in
size='3'>San Jose
w:st='on'>
size='3'>Calif.
size='3'>Additionally, Calpine seeks to slash about 775 jobs from its
employment base. Calpine expects to make additional refinements to its
restructuring process along the way, but does not plan on significant
staff reductions in the future, according to a
spokesperson.
Judge
Witholds Full Consent for Refco's Bonuses
Moderately swayed by
Refco’s pleas, a federal bankruptcy judge has partially approved
the struggling commodity brokerage’s request to pay key employees
up to $4.1 million in bonuses and severance to prevent them from jumping
ship, Portfolio
Media reported yesterday. On Friday, U.S.
Bankruptcy Judge Robert
Drain granted Refco's bid to give 24 employees
incentive bonuses in order for them to stay with the beleaguered company
as its operations continue to wind down over the next year. However,
Judge Drain delayed authorizing bonuses for 14 employees of Refco's
unregulated offshore unit, Refco Capital Markets Ltd. The case is
In re Refco LLC
size='3'>, case no. 05-60134, in the U.S. Bankruptcy Court for the
Southern District of New York in
w:st='on'>
size='3'>Manhattan
size='3'>.
In related news, a complaint
filed by Refco Inc.'s investors said that the company’s auditors
and underwriters ignored documents that should have raised red flags
about questionable loans involving the futures broker, according to
Reuters yesterday. The complaint, filed Monday as part of a consolidated
shareholder and bond investor lawsuit, blames dozens of parties,
including Credit Suisse Group Inc., Bank of America Corp. (BAC.N),
Deutsche Bank AG and auditor Grant Thornton for not uncovering Refco's
fraud sooner. According to the complaint, Grant Thornton in 2004
received confirmation that Refco Capital Markets lent $335 million to a
customer just three days before the end of Refco's fiscal year in
February 2002. That $335 million loan was in fact designed to hide bad
customer loans on Refco's balance sheet, the complaint said, and was one
of 11 similar transactions involving Refco.
href='http://www.nytimes.com/reuters/business/business-financial-refco-lawsui…'>Read
more.
w:st='on'>
name='8'>Oneida
face='Times



New
Roman' size='3'> Shareholders Request
$170 Million Exit Loan Info
An ad hoc shareholders
group of bankrupt flatware manufacturer Oneida Ltd. has asked a
bankruptcy court to deny the company's request to keep secret certain
details on its proposed $170 million bankruptcy exit loan, saying the
company is trying to shield 'critical information' from the public
concerning the nature and amount of fees payable to lender Credit
Suisse, Portfolio
Media reported yesterday. In court papers
filed this week in a
w:st='on'>
size='3'>Manhattan
size='3'>bankruptcy court, the shareholders said the company's request
to seal the loan information is “a continuation of the
Debtors’ pre-petition pattern of systematically excluding minority
equity holders from meaningful participation in this
face='Times New Roman' size='3'>restructuring.”
name='9'>Commentary: New Bankruptcy Law’s Effect Still in
Question for Western Tennessee
While the new bankruptcy
law last year caused a dash to the courts prior to its October
enactment, filings have declined sharply in the Memphis area as debtors
struggle to understand changes to the Bankruptcy Code and area attorneys
and financial educators struggle to help them, according to an editorial
in the Memphis Daily
News today. The
w:st='on'>
size='3'>Memphis
historically has experienced high numbers of bankruptcy filings, giving
the changes enacted in the new law particular poignancy among the
area's high concentration of low-income filers. It has yet to be seen
how the new law will affect the number of case filings in the Western
District in the long term. Chapter 13 filings continue to outpace
chapter 7 filings in the Western District, but the balance has been
shifting to some extent in recent years. Western District chapter 7
filings have risen over the last three years, with 9,232 filed in the
year ended February 2006, up from 7,632 in the year ended February 2005
and 8,388 in the year ended February 2004.
href='http://www.memphisdailynews.com/Editorial/StoryEdMain.aspx?id=92298'>Read
more.
For
GM, Pension-Accounting Shift Could Dwarf Gain on GMAC
Deal
While the sale by General
Motors of a 51 percent stake in General Motors Acceptance Corp. is
expected to bring in about $10 billion, a new accounting rule being
considered by the Financial Accounting Standards Board, which may take
effect when the deal closes in the fourth quarter, could make that sale
an increasing liability to the company’s balance sheet, the
Wall Street Journal
reported today. Around the time the deal closes, though,
a new accounting rule may take effect that would require GM and other
companies to report their pension deficit or surplus on the balance
sheet as an asset or liability. That means that even if the GMAC sale
increases GM's assets by about $10 billion, the auto maker could see a
decrease in assets and increase in liabilities that would bring about
$68 billion in unrecorded liabilities onto the balance sheet. Those
liabilities, along with the assets gained by selling a controlling stake
in GMAC, when applied to GM's 2005 balance sheet, would leave the
company with shareholders' equity of about negative $43 billion. GM's
shareholders' equity -- a net-worth figure that represents the
difference between total assets and liabilities -- was $14.6 billion at
the end of last year.
size='3'>
href='http://online.wsj.com/article/SB114420532052817411-email.html'>Read
more. (Free registration required)
name='11'>Patchy Recovery for
w:st='on'>
size='3'>New
Orleans
Before Katrina
struck,
face='Times New Roman' size='3'>New
Orleans
businesses, the vast majority of them small establishments with 99 or
fewer employees, but today only 2,000 of those have reopened, the
New York Times
size='3'>reported today. 'The recovery in
w:st='on'>
Orleans
slowly than we had hoped,' said David Wyss, the chief economist at
Standard & Poor's, which grades the financial health of
municipalities. Most of the businesses that have resumed operations fall
into one of two categories: restaurants (29 percent of the food
establishments operating in the city before Katrina have reopened,
according to the city) and large companies with the economic means to
fix up their facilities and cover the extra costs of doing business in
an area that is functioning but disabled. A lack of working capital,
customers and housing are proving to be roadblocks for even the
most well-intentioned businesses, as is the lack of essential
services.
href='http://www.nytimes.com/2006/04/05/business/05recovery.html?pagewanted=p…'>Read
more.
International
name='12'>British Support Pension Reforms
The British Pensions
Commission said that proposals to solve the pensions crisis by raising
state spending and making Britons work longer have won broad support,
Reuters reported yesterday. The government-appointed commission's final
45-page report stood by the suggestions it made last November, saying
'the overall shape' of its recommendations remained appropriate. The
agency warned that if nothing is done to tackle an estimated £57
billion pension shortfall, a growing number of
w:st='on'>
size='3'>Britain
size='3'>'s aging population could find themselves dependent on
means-tested state handouts when they retire.
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=personalFinanceNe…'>Read
more.
href='http://today.reuters.co.uk/news/newsArticle.aspx?type=personalFinanceNe…'>